62% of remortgage customers in January remortgaged to take advantage of the new lower mortgage rates that are currently on offer, according to research from LMS.
The firm surveyed customers opting to remortgage at the start of the year and found that 19% of homeowners increased the size of their loan by more than £10,000 to free up capital to pay off other debts or spend elsewhere.
Releasing equity in their home meant that 19% were able to fund home improvements, while 11% said they would use the extra capital to consolidate their debts. This is 2% more than the number of remortgagors who did this in December, highlighting that families are still feeling the pinch after the festive period. 3% of homeowners also said they planned to use the money to help their children onto the property ladder.
41% were motivated to remortgage by the potential cash savings on offer and the opportunity to reduce their monthly outgoings.
81% took advantage of the opportunity to switch lenders, while just 2% were incentivised by their existing lender to stay with them, a fall of 2% since last month, a sign that lenders could be doing more to keep current customers, LMS said.
46% consulted with an independent mortgage adviser or broker, a marked improvement since December when only 37% did so.
Andy Knee, chief executive of LMS, said: “Many customers are remortgaging to free up extra cash each month or increase the size of the loan to reduce the burden on their finances. Recent news that wages are finally set to see an increase in real terms will come as welcome news to all those feeling the pinch, and may offer some light relief in 2015.
“Despite the lowest ever interest rates available for remortgaging at present, lending levels remain lower than last year as homeowners fail to capitalise on these offers. Many have been spurred on by new year’s financial planning or a fear that interest rates will rise but more could be set to benefit by remortgaging.”